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"Global Shock Absorber" China Holds Currency Stable, Margin Debt Rises For 7th Day
Offshore Yuan continues to trade at a discount to onshore against the USD (imply a modest further devaluation is due) but the spread is narrowing and today's practically unch Yuan fix is dragging USDCNH lower (stronger Yuan). Yesterday's afternoon session ramp in stocks managed to extend its gains as margin debt rises for the 7th straight day. The PBOC injects 120 bn Yuan liquidity via 7-day reverse-repo (notably more than the 50bn maturing), as HSBC's Stephen King concludes, the message from last week's surprise devaluation is clear - China no longer wants to play the "global shock absorber" role - instead is more focused on domestic instability... and there is no other nation yet willing (or able) to shoulder the responsibility.
- *CHINA SETS YUAN REFERENCE RATE AT 6.3966 AGAINST U.S. DOLLAR
And offshore Yuan is fading...
- *SHANGHAI MARGIN DEBT RISES FOR SEVENTH DAY
- *CHINA'S CSI 300 STOCK-INDEX FUTURES RISE 0.7% TO 4,015.4
- *PBOC TO INJECT 120B YUAN WITH 7-DAY REVERSE REPOS: TRADER - The most since February
The People’s Bank of China stepped up injections via reverse-repurchase agreements Tuesday to offset a tightening in the money market.
The central bank sold 120 billion yuan ($18.8 billion) of seven-day reverse repos, according to a trader at a primary dealer required to bid at the auctions. That compared with 50 billion yuan maturing Tuesday.
Rather ominously HSBC's chief economist Stephen King has a common-sense explanation for how China ended up here...
... and where we go next...
China’s role as a “stabiliser” for the global economy has contributed to instability within China itself.
Yes, the global economy has done better as a consequence of China’s behaviour but, for China, there have been significant costs: an overheated property market, a substantial increase in indebtedness, a roller-coaster ride for the stock market, a highly leveraged shadow banking system and a declining marginal rate of return on capital spending...
It is easy to criticise China’s internal imbalances. Doing so without taking into account the role of those imbalances in stabilising the global economy is, however, a major mistake. It doubtless makes sense for China now to address its internal imbalances. Yet, in doing so, the rest of the world needs to find a new shock absorber. It’s not at all obvious whether any economy is really up to the task.
Simply put, a stronger USD will crush an already fragile US economy and Europe is hardly ready for a strengthening currency and to 'absorb' the world's deflationary pressures. With no obvious shock absorber on the horizon, China just passed the hot potato back to The Fed - hike rates, help the world stabilize at the cost of the domestic economy... or don't and currency wars escalate (not helping US) and global deflationary pressures hit (just as we are seeing in commodities and high yield bonds).
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gonna be a fun ride either way and by fun I mean, shitastic. NO amout of preparing will help. Read this: http://www.amazon.com/One-Second-After-William-Forstchen/dp/0765356864
What does China know that we don't? Something maybe coming down the pike, they don't want any hot money,,,,,those bankers like it fast
Chinese markets just closed down over 6%. Something more going down there. Look out U.S. markets when opened.
How about North Korea? It's time for them to carry some of the load.
Yea. From what I've read, their glorious leader can do ANYTHING!
"China no longer wants to play the "global shock absorber" role - instead is more focused on domestic instability..."
Clearly a disturbance in the farce!
Clearly a disturbance in the farce!
So disturbing a farce in fact that someone in the U.S. "eagles nest" took the initiative to assist the PBOC last Wednesday in Tianjin with a rather spectacular warning when it was official that they would be devaluing their currency after of course those other interested Western parties tried to help the Chinese market(s) with some much needed short selling!
This will all end well.
My view of the Chinese government is the same as my view of the US government. However, the Chinese government has over a billion hands THEY'RE trying to keep from around their throats.
Totally different numbers ;-)
I'm placing my bet on middle of September. All the religous and end of the world juju going on. The Pope crashing at the White house then hitting the UN circuit for Agenda 2030 to be announced. The FOMC right in the mix. The deadline for the Senate vote on the Iran treaty[and to see what the Jews there after, they love wars on holidays].
I figure shit will blow up middle to second half of next month. Then enter the IMF with a new currency basket for international settlement and whatever else 'they've' come up with. While it is possible the new scheme arrives out of a chaotic vacuum, I'd imagine it's already been thought up and planned out well.
Just for fun, look up the number 266.
Such as which day September 23 is and which number this Pope is.
Of course, all just random, meaningless numbers, but fun to ponder if there is a deeper meaning.
another fun one is type in 9/23/2015 into google maps. see what comes up. majority of the time it comes up on CERN. I do find all the juju going on about the time a little unnereving, but that stuff never works as well as facts, for me.
The problem with gold is that it is also an industrial (mainly electrical and electronic) metal.
hmmmn
gold could stabilize the world economy....after all it's price is arbitrary...let it function as the reserve and I'm sure a suitable price will emerge...
it is that simple...try it...just quit messin' with the market and watch!
I look at it as China seeing significant weakness domestically took the initiative and did the deed now they do the 'good cop/bad cop ' and stabilize to an extent and tweak as necessary.
They have check mated the Fed, but Yellin will stand there with her dick in her hand the other thumb up her ass. No hike in Sept.
Tianjin (if you've had any direct experience in China) was the usual F Troop cluster fuck just louder and more colorful than usual.
Conspiracy can be good for the soul. Heaven knows an idiot like Obama and the MIC would be crazy enough to do this if they could.
http://www.naturalnews.com/050816_Tianjin_explosion_space-based_weapons_military_retaliation.html#
The domestic deflation has been pretty good stuff to be honest. Food prices have stopped rising for one. The property bubble in non-major markets has popped, while in the 1st tiers it has at least paused allowing for the markets to catch up.
Incomes continue to rise rapidly. In Beijing for experienced and legitimate IT workers, salaries are around $50,000 a year now. In Silicon Valley it would be possible for them to net ~$150k, however once taxes and basic living expenses are taken out, Beijing is still the better deal for everyone (go ahead, rent or buy a decent place in san fran for under $50k a year, i DARE you to try).
Unskilled service industry wages area also going up, but they are failing to catch up, and honestly that's a good thing. The cities have grown by insane amounts in the past 15 years. They have grown to the point where the government is working on ways to cap that growth and force marginal migrant residents back to where they came from. Limiting school access for their children, restricting their abilities to buy property, these are the big ones and they are tightening the screws.
If you follow Xi's actions, he's going a bit of "Cultural Revolution" Lite. And it's rather deserately needed if China is to have any future worth having. Before getting into that, here's what the Cultural Revolution was all about, and before that, we have to understand the Great Leap Forward:
Onto the Cultural Revoution
Lessons learned that are being applied from what I can see right now:
Agriculture is seeing a revolution as well right now. It's in vogue now for people in the cities to rent a small patch of ground and basically pay the farmers to tend to it, or pre-buy food deliveries. This is your safe, organic, non-GMO freerange stuff. Supermarkets are being pushed to the limits due to online shopping which does next-day or same-day delivery of basically everything for cheaper and higher quality with better promotions. Dairy is about dead now. It kinda sucks to see the efforts of some rather famous expats all gone to waste in this area, but what comes next will be far better. Euro and Aussie milk is just cheaper now. It's literally cheaper to buy imported milk now. And even when that economic factor goes away, expectations have permanently risen. It means that the domestic industry must be torn down and rebuilt to higher standards while being cheap.
See all that shit going on right now, I think China is currently very aware that there's a reset coming. Without a reset things are just going to get worse and worse and worse for everyone. The can will be kicked as long as possible though. In this age of information here's the problem. The FIRST great power to hit the reset button will probably end up fucked for a long time. They will be blamed entirely for what is going to unfold. It will NOT be a pretty thing and it's very likely there will be some rather nasty wars. That nation that hits the button will be blamed and that blame will carry on for a long time. The SECOND nation to hit the button though, they will come out in the best situation. They were simply forced to reset by the FIRST nation. All problems can be blamed on the first nation. Furthermore, the first nation to hit the button will be seeing their assets crater while everyone else is still playing, meaning that they will get raped. If they enact protectionism to stop it, they will be locked out for a long time from the international system, and it could very well lead to war.
And there you have it. This is a fucked up race where everyone wants to finish second because 1st place gets raped in a way that would make India blush. The US and EU seem to be in a pact to avoid eating that bullet. Japan has no real friends in this and are a target to be the first to fall, although poltically everyone is focused on China. Russia is in the mix as well, but it has been downplayed as a minor economy for so long that it wouldn't really register, and due to what Russia has, it simply wont fall anyways. China isn't going to be first. The rest of the BRICS (BIS) are so minor that they really do not matter all that much.
China moves could very well setoff a 1997 repeat in Asia. SEA has some serious issues and lack of market depth to hide them. Any significant move by China can set them off. The Asia Pivot by the US is meant to inject politics into this. Making it politically more difficult for China to fuck over SEA, changing it from economic disputes into land and border disputes. This makes for better propaganda. For example: Chinese moves result in SEA financial crisis. Japan ends up eating the first reset bullet. The fallout will make China's action MILD in comparison. Sort of the way that the filipinos seem to forget about the US-led genocide after Japan moved in. With Japan playing the bad guy, there is a power vacuum. The US does NOT want to see China fill that vacuum. The US wants the US to fill it, or at least prevent Chinese power from solidifying in the region.
Remember, the first one to be forced to hit the reset button will be blamed for it all, the facts don't matter. The Second across the line gets to emerge first, without taking the blame, and impose a new system. The EU-US pack is based on the EU not controlling much of anything after the reset. The EU just wants to survive in one piece, without US backing that won't happen. In return, they give the US support, the US is trying desperately to end up the winner in all this. That's what TPP and all related deals are about. Get them mainly hammered out pre-reset, and in a post-reset world while everything is going to shit, it offers a new set of rules. Those rules greatly benefit the US economy above all others. What has been leaked so far is obviously horrible for all others involved. So why are they even entertaining it? Because they know it's about to all go to shit, and if they get this negotiated in advance, it might be just enough of a structure to get them through the reset without an implosion, while deferring to US supremacy.
China is the wildcard here. China's the one that can fuck it all up. See all the hacking accusations and the propaganda to portray them as Nazis? Crying about the islands. Attempts to destabilize the nation in ways that result in any reaction being further attacked? It's not a fucking coincidence. Ideally, the US would LOVE to see China take that first place ribbon, but realistically it's gonna be Japan. The propaganda and psyops efforts are in place to "share the blame" when that big red shiny button gets smacked. Making it easy to shift Japan-hate over to China, or to boost the China-hate if somehow China is forced to reset first or thinks for a moment that they are in a position to "get away with it".
And that's what it all really boils down to right now. If the US wins this, they will lock down trade rules for a good long time, ensuring the dominance of a system they control with the TPP, TIPS, and others. If China wins, there's the New Silk Road system that will link the world, see trillions in development deals over a few decades (for a freshly reset global economy, this would be welcomed by all), and a flat out new global trade system that sets China as the main hub for it all in Asia, Europe, Africa and South America. The US will be forced to isolate or play along. If China loses this, it will probably just implode (see the hillary comment of china only having 5 years left).
Does this shit all make sense to y'alls yet? Cus this is EXACTLY what's going on in the world. Everything else is distraction. The major points of this are being IGNORED ENTIRELY by the media. Yes, I know, shiny tin foil hat and all that, but the pieces all fit together very well.
An awful lot of words for someone who has no idea what he's talking about.
...The Chinese Communist goal was clearly stated at the beginning, in 1977, when Deng Xiaoping explained the strategy of opening economic relations with the West. Deng told the CCP Central Committee that they were engaged in “the international united front struggle” which was a strategy about which the “American imperialists” know absolutely nothing. “We belong to the Marxist camp,” he explained, “and can never be so thoughtless that we cannot distinguish friends from enemies.” According to Deng, President Nixon and President Ford were enemies, as well as President Carter. All future “American imperialist leaders” were also enemies. “What we need mainly is scientific and technical knowledge and equipment,” he said. In the future, America “will have no way of avoiding defeat by our hands.”
The strategic thinking of the Chinese Communist leadership holds that as long as America continues to enrich China, and as long as China can build its military power, then peace is workable. But when the economic wellspring runs dry and the Sino-American partnership has exhausted its profitability, then peace becomes unworkable. Rising discontent within China must then be diverted. The natural course would be for the people to hold the country’s leaders responsible, and to remove them from power. Many of these leaders would be tried as criminals, and would lose their heads. The only alternative to this would be war with the United States. This course automatically shuts down the Chinese democracy movement, which would have to choose between China and America in the course of a life-and-death struggle. In such a contest, the Chinese Communist Party automatically wins the assent of nearly all Chinese – including democrats.
And so, the best course for a failing Chinese economy is war. One might ask what kind of war? In a secret 2005 speech given by Chinese Defense Minister Gen. Chi Haotian (titled “War is not far from us and is the midwife of the Chinese century”), a biological attack on the United States was suggested as optimal. “It is indeed brutal to kill one or two hundred million Americans,” said Gen. Chi. “But that is the only path that will secure a Chinese century….” Having already noted that millions of Chinese would die if the Chinese economy collapsed, Gen. Chi explained that the only way out for China was to “teach the Chinese people to go out” (i.e., attack the United States). “We, as revolutionary humanitarians, do not want deaths,” said Chi. “But if history confronts us with a choice between deaths of Chinese and those of Americans, we’d have to pick the latter….”
Worried about the Chinese public’s reaction to the mass extermination of Americans, the Chinese Communist Party conducted an online survey through an intermediary. “[W]e wanted to know whether the people [of China] would rise up against us if one day we secretly adopted resolute means to ‘clean up’ America,” Gen. Chi explained. The survey asked if it was acceptable to shoot prisoners of war, along with women and children. If an overwhelming majority approved of such measures, “then they would approve our ‘cleaning up’ America,” said Chi.
The curious American reader might ask how the Chinese public reacted to the survey. “What turned out to be comforting,” noted Gen. Chi, “is they [the Chinese public] did not turn in a blank test paper. In fact, they turned in a test paper with a score of over 80. This is the excellent fruition of our Party’s work in propaganda and education over the past few decades.”
And so, if China’s economy stops growing, America should expect that its relations with China will deteriorate. This is based on the internal logic of the Chinese political system – which appears to be locked on a collision course with America.
http://www.financialsense.com/contributors/jr-nyquist/2011/09/06/when-th...
You're basically copy pasting falungong nonsense at this point, you have no fucking clue what you're talking about.
Oh, the all powerful Falungong. LOL. Get another talking point, this one is past its sell-by-date.
You could even read a bit, or talk to your Chinese wife and get some basic translations on weibo.
Well, I take that back since the Great Firewall and your inability to read Chinese keeps you all comfy and well, fire walled. Enjoy.
no they are not all powerful, they have essentially zero power and a still pissy about that. the only thing they can do anymore is blast out links to bullshit on ET, which is where this fake story originated. sorry, but you're full of shit just like your little lunzi shitstain faggots
Let me return the compliment. You are 'full of shit' and a 'shitstain faggot' for perpetuating all that blather without understanding what the original post was about. It all started when some poster called you out and said your analysis was nonsense. Then you mis-directed to the Falungong (an obvious hate group for you). I called you out for the misdirection and now you are making scatological and presumptive comments about me. I don't mind because you have exposed yourself as an illiterate as well as a phony. But then you should be used to that designation.
Take care Laomei.
It is going to be interesting if the horrors of Wars can be avoided. A crumblng Empire (US) indebted and bankrupt in idelogical appeals with a free market system under captives by its own autocrats. This is a face-off with China still so steeped in cultural superiority that it thinks that outside of its borders will be the panacea for civilizations. What a deluded pipe-dream ? Herein lies its greatest weakness which is the inabilty to melt the talents of different cultures to forge Creativity and Technological prowess. Pride has always set it back and this time it is no different, they are not on a journey of progress but regressing within the warm wombs of a recent win from an export gargantum funded by the greed and indiscipline of the West. There is no inspiring leadership that break the yoke of a self satiated command and control structure that carries with it all the fault llines of inflexibilities and concentrated risks. Not a model for a much globalized world with its internets.
Survive within the crevices with the opportunities from ongoing volatilities (an insurance that trading is not dead). Avoid long term investments in the peripherals like SE Asia who is even more pathetic with still infightings in the midst of fierce headwinds. All infrastrutures there will soon be modern day Acropolis.
China has the New Silk Road
The US has TPP, TTIP and TISA
The Silk Road thing would be financed by the AIIB and other similar things. It's a multi-decade development project that would funnel a shitload of cash into various economies for the "one belt one road" concept. This gives an outlet for Chinese overcapacity, jobs for the locals, and some good old fashioned serious debt for all those involved. If it happens, it sets China up as a global hub for all trade that matters. It's not imaginary how much trade this would generate. It allows China to export the dirty factories while still controlling them and focusing more on the trading and higher value goods. The Berlin-Baghdad railway was a trigger for WWI, this is something far grander, once set in motion with the cash flowing and participating countries seeing the immediate benefits, it's not gonna stop.
The TPP, TTIP, TISA, etc. This is more or less a power play to ensure that the US decides the rules of trade, isolates China, and sees the greatest benefits. What has leaked is god fucking awful 1984 brave new world type shit. With a starting point like that, even negotiating seems like a fucking joke for everyone who is not the US. Why would they be doing it? It's all reset related, that's the only answer. Shit's gonna get bad and they'll have to choose who owns them going forward. China or the US. That's really all it comes down to.
Actual shooting war is unlikely, neither side is willing to eat the losses involved. The PRC needs flash gear and troops that give the illusion of power. And the US has a bunch of gear that is safe-queen shit. Losing any of it would be devastating for many reasons and neither side really wants to go nuclear for obvious reasons. I can see this going Currency, Trade and Proxy war without much problem though.
Vice-Chairman Of China's
Military Commission
3-1-9
This is falungong nonsense that they made up and posted around the net in 2005. Even your dates for the alleged speech are wrong. It plays to detractors of China while being utter nonsense. It's typical FLG bullshit an it's sad and pathetic that you seem to have actually bought into it. Jesus you are a fucking moron.
Is it? What makes you say that? Could it be fealty to the Chinese Communist Party regime? I think it could be.
because it's falun gong bullshit and was exposed as such long ago. get a fucking life.
Why this rabid defense of Chi Haotian? What is the agenda? Why the deflection?
Answer that, and eschew your misdirection to the Falungong--who don't matter by your own admission (and no one else btw).
Chi Haotian (aged in the late 80s) is not the issue. Tell us your 'Laomei' secret info as to why things are going down the way they are. Perhaps you need a few more years in studying Chinese. Maybe focus on the newspapers because Weibo is out of your competence. Ask the wife.
Obviously to me you are a phony and a shill.
Prove me wrong.
Sorry sport (or fellow traveler). His speech was widely reported and there are other speeches as he was part of the PLA propaganda--i.e. 'Communications/ Xinhua dept.. He served in the Korean campaign and rose to his position after he was one of the heavies that squashed the 1989 protests, from his base in Jinan. He is allied to Jiang Zemin allied to the Shandong faction, that now are under fire from Mr Xi. He was a pro-soviet supporter and at his great age still spews the China Uber Alles meme and trotted out, at times, to stoke the fires .
Nope, it wasnt. It was pumped out on random falungong outlets then copy pasted on bullshit sites. Just because you copy paste the same bullshit over and over again all over worthless sites doesnt make it real. Sorry dipshit.
Well old american, I never posted any sites. As you do not read Chinese and you obviously, in your own very special dipshit manner, have no idea about the subject except to push an agenda, I suggest you give us the sources for your opinions. Chi is a very interesting study in the current situation.
Do enlighten us all.
fuck off lunzi, go suck on li hongzhi's micropenis some more
Oh, what a pathetic response. You definetly have a emotional problem with the almighty Falungong. (LOL).
You do know that 'Lunzi" is yan lun zi you, i.e., 'freedom of speech' some thing you are obviously unacquainted with. The only one 'sucking' Li Hongzhi's member is you. Keep it up
and there you go and prove my point. useless little faggot lunzi
Yes indeed, I have proved your point that you are clueless and probably an obsessive and idiotic, about the current situation. Your mis-directions to "falunggun' is so 'faggoty' and so talking points. I hope you are well paid for the mis-direction, faggoty or not.
You know, if you could get your head around the fact that you are deficient in information and analysis about the subject of the post on ZH you might have something to say.
Attacking me is just your demise.
China Global Shock Absorber? HARDLY.
China is more the like the third man in the line up, getting on base with one arm tied behind his back. But the Babe, Jolting Joe, the Clean Up Hitter, suddenly can't get a hit to save his life.
The glue factory is beckoning.
Who knows?
Maybe Shoeless Joe Obama is doing a Black Sox of 1919. Taking a dive. Except the stakes this time are humanity itself.
Margin Debt increased 7 straight days?
Sumpin tells me this margin debt has been taken on by a completely different cast of characters than the ones that started the spike at the end of 2014. Players that know the Shanghai Index is going back up.
And all the shorts in suspended stocks will find that when those stocks do resume trading the 'asking prices' are going to be a lot higher than they were when those stocks were suspended.
I kept being hautned by the "one minute to midnight article" largely because I was a huge iron maiden fan growing up. I just went back and watched the video from 1984 with new eyes. Two things stood out at me. The conference room is being set up for internet video chat. This is WELL before the net was invented. I grew up a mile from mission control. I was privy to the invention of the net. In '84, the best you could muster in the civilian realm was BBS or bulletian board service. We actually were putting an old fashoned rotary dial telephones in a cradel modem at 9600 baud. The second is the currencies in the briefcase of money that gets opened up. American Dollars, Queen on the front sterling and someting else. most exceleent foreshadowing.
The premise that hiking i% will be deflationary is not entirely accurate. The global fiscal environment sees little in way of yield right now. A rise in US i% would be better for the real economy and for Banking tier1. ..financial instrument re-valuation need also not be utterly gutted, on much the same basis. ...further, in terms of Ag.Demand, falling prices may indeed ordinarily translate into lower GDP, but it's the improvement in Investment and Savings that ought to be stimulated by rising i%. - as it could signal a return to a normal Credit environment. The central obstacle - the gun to Democracy's head - are the Zombie banks. Since they cannot be wound down - a small rate increase should help determine what measures could return these institutions to functionally-operative. I expect them to make huge losses.